Real estate investment trusts (REITs) have long been prized by income seekers for their higher dividend yields. Thanks to their corporate tax structure, REITs are required to kick out the bulk of their cash flows back to investors as distributions. As a result, many yield between 4 and 6%. But lately, REIT investors are getting something additional with their high yields: a strong total return with plenty of capital gains.
Thanks to a variety of factors – the rebounding economy, high rates of inflation and low interest rates – REITs have been on a tear. Total returns for the sector have surpassed the broader market.
But the best news is that REIT’s strong returns could continue into the new year. Many of the factors propelling the sector are expected to persist. For investors looking for strong yields and a fair bit of capital gains, the sector could be a great bet.
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